READ the 1/21/20 speech by Bill Graham, President of Renaissance Wilmington Foundation below:

SOH 1.21.20 REMARKS—BILL GRAHAM                                                                                                     

WE HAVE CLEAR STRATEGIC CHOICES: 

 

SHOULD NHRMC SURRENDER TO A BIGGER PARTNER AND ABANDON FOREVER THE INDEPENDENT QUEST FOR EXCELLENCE IN CARE AND COST THAT HAS BUILT IT, 

 

AND IS THIS THE TIME TO MAKE THAT CHOICE?

 

WE’VE ATTENDED EVERY PAG MEETING, HEARD WHAT PAG HAS HEARD.

 

WE THANK OUR PAG FRIENDS AND NEIGHBORS FOR TAKING ON THIS MASSIVE TASK. THEY ARE WORKING HARD AND HAVE OUR RESPECT.

 

AT THE SECOND MEETING OF PAG, NAVIGANT, THE CONSULTANT, AND CEO JOHN GIDZIC LAID OUT ALL OF THE REASONS FOR UNCERTAINTY ABOUT THE OUTLOOK FOR HEALTHCARE AND NHRMC. WE HEARD UNCERTAINTY, CHANGE AND FEAR. IT’S ALL THERE, ANYONE CAN READ IT.  TIME DOES NOT ALLOW US TO REPEAT EVERY CONCERN THAT WAS RAISED. WE DID NOT HEAR REASONS THAT WE FELT JUSTIFIED SURRENDERING OUR INDEPENDENCE.

 

THOSE OF US WHO OPPOSE THE SALE—ARE YOUR NEIGHBORS TOO. OUR GROUP INCLUDES DOCTORS, NURSES, LAWYERS AND BUSINESS PEOPLE. WE TOO HAVE WORKED HARD IN PARALLEL, ALARMED BY THE VOTE TO SELL AND THE RFP TO SELL JUST ISSUED. WE NEED TO SPEAK OUT. 

 

WE MAY NOT BE PERFECTLY UNANIMOUS IN OUR JUDGMENTS AND RECOMMENDATIONS ANY MORE THAN PAG MEMBERS, BUT HERE GOES:

 

WE HAVE VERY SPECIFIC OBSERVATIONS THAT PAG NEEDS TO CONSIDER RIGHT NOW, BEFORE THE MARCH 16 DEADLINE FOR RFP RESPONSES INUNDATES PAG WITH PERHAPS 28 RESPONSES FROM PROSPECTIVE BUYERS AT 100 PAGES EACH OR 2800 PAGES! THAT WILL FORCE AN EVALUATIVE PROCESS LEADING TOWARDS  A CHOICE OF THE LEAST BAD ALTERNATIVE. 

 

ALL OF THIS WILL BE RECEIVED, CONTROLLED, SUMMARIZED AND RECOMMENDED BY NAVIGANT, THE SAME OUTSIDE CONSULTANTS WHO HAVE WORKED ON A SALE OF THE HOSPITAL FOR SEVERAL YEARS.

 

LET’S LOOK AT THE DECISION MAKING ENVIRONMENT. LOOKING AT THE HEALTHCARE ECONOMIC AND POLITICAL CLIMATE, ONE SEES  A TIME OF MAXIMUM UNCERTAINTY ABOUT THE FUTURE OF HEALTHCARE.

 

OUR HEALTHCARE PROGRAM, THE ACA OR OBAMACARE,  HAS BEEN UNDER CONTINUOUS ATTACK, RIPPED APART BIT BY BIT, SINCE IT WAS PASSED. MEANWHILE  IT GAVE 20 MILLION PEOPLE INSURANCE, COVERED PRE- EXISTING CONDITIONS, ALLOWED YOUNG FOLKS TO STAY ON FAMILY COVERAGE AND MUCH MORE. 

 

NEVER A PERFECT SOLUTION—IT WAS A HARD FOUGHT COMPROMISE. EVERY LARGE NATION IN THE WORLD HAS MEASURABLY BETTER HEALTHCARE PROGRAM AT A FRACTION OF ITS COST.   

 

FOR MANY OF US WHO HAVE GROWN UP IN AN AMERICA WITH UNLIMITED RESOURCES AND A “CAN DO” ATTITUDE, IT IS NEARLY IMPOSSIBLE TO BELIEVE WE COULD BE IN THIS SORRY PLACE.

 

UNMANAGEABLE RISK #1-A RECENT COURT DECISION TO KNOCK OUT THE PRE-EXISTING CONDITION  PROTECTIONS IN TEXAS HAS LED TO DETERMINING THAT ALL OF THE ACA IS UNCONSTITUTIONAL.THE SUPREME COURT DENIED TODAY TO HEAR THE CASE THIS YEAR, BUT THE MORE LIKELY EXPECTATION IS NEXT YEAR.

 

IF DEEMED UNCONSTITUTIONAL, WHAT WE DO KNOW IS OUR HEALTHCARE SYSTEM WILL HAVE 20 MILLION MORE UNINSURED. THIS, AT A TIME WHEN OUR SO CALLED MIDDLE CLASS CAN NO LONGER PAY THE COST OF DEDUCTIBLES AND SOARING COSTS OF COVERAGE AND MEDS. 

 

THERE ARE MANY STATISTICS THAT TELL THE STORY. ONE SHOULD BE ENOUGH. GALLUP SAYS 25% OF US ARE DELAYING TREATMENT FOR SERIOUS ILLNESS + 8% ARE DELAYING TREATMENT FOR LESS SERIOUS ILLNESSES BECAUSE OF UNAFFORDABILITY. THAT’S ONE OUT OF EVERY THREE PEOPLE IN AMERICA!

 

UNMANAGEABLE RISK #2 THE ELECTION OUTCOME.

WE CANNOT TAKE TIME TO DISCUSS THE PARTY AND CANDIDATE POSITIONS, AND RESULTANT COMPOSITION OF HOUSE AND SENATE. THEY ARE SIMPLY AND OBVIOUSLY UNMANAGEABLE RISK #2.

 

THE HEALTHCARE PROBLEM TODAY IS SO SEVERE THAT THERE WILL HAVE TO BE SOME RELIEF IN THE NEXT SEVERAL YEARS REGARDLESS OF ELECTION OUTCOME. THE HUMAN SUFFERING IS BECOMING INTOLERABLE.  

 

THUS WE MAY BE ENTERING SEVERAL YEARS OF UNCERTAINTY WHEN NEW INVESTMENT IN HEALTHCARE, UNLESS ABSOLUTELY NECESSARY, IS HIGH RISK.

 

MEANWHILE, OUR HOSPITAL IS IN FINE FINANCIAL CONDITION, IN THE TOP TIER OF OVER 6,000 HOSPITALS. WALL STREET SAYS 8% OF HOSPITALS ARE AT RISK OF FAILING AND ANOTHER 10% ARE WEAK. WE CERTAINLY ARE NOT.

 

WITH ALL OF THE UNCERTAINTIES WE WOULD BE FOOLISH TO RUSH INTO A MERGER WITH A BIG SYSTEM THAT WOULD MAKE OUR SITUATION WORSE, NOT BETTER, CUTTING PEOPLE,  QUALITY OF CARE, AND SUCKING MONEY OUT OF WHAT WE HAVE BUILT. 

 

DO NOT BE CONFUSED—NOT FOR PROFITS ARE NO BETTER, NO DIFFERENT, FROM FOR PROFITS WHEN IT COMES TO THESE WELL DOCUMENTED OUTCOMES. 

 

MERGERS ARE NOW FALLING OUT OF FAVOR. MANY ARE UNWINDING. BECAUSE PROMISES ARE NEVER KEPT.

 

CONCLUSION #1 THE MAIN POINT WE ARE MAKING TO PAG AND ALL IS THAT THE STRATEGY TO FOLLOW TODAY IS TO PROCEED CAUTIOUSLY. EXPANSION WITHOUT ASSURED PROFITABLY IN AN UNCERTAIN TIME IS TOO RISKY. 
 

WE THINK THIS IS THE TIME/ TO CONTINUE/ TO CONCENTRATE ON MAKING OUR HOSPITAL BETTER, NOT NECESSARILY BIGGER. 

 

TO TELL YOU WHY, WE HAVE TO LOOK AT COMPETITION AND EXTERNAL FACTORS:

 

FIRST, INPATIENT HOSPITAL CARE WE’VE SEEN NO OBJECTIVE MARKET STUDY ABOUT HOSPITALS IN THE REGION. WE DO SEE THERE ARE PRIZE WINNING COMPETITORS—ONE A SMALL100 BED HOSPITAL IN BRUNSWICK COUNTY AND ANOTHER— A SMALL135 BED HOSPITAL IN MOREHEAD CITY, BUT THAT IS 137 MILES AWAY, NEARLY AS FAR AS CHAPEL HILL, SO OUR INPATIENT MARKET LOOKS REASONABLY SAFE.

 

OUR 855 BEDS ARE 90% OCCUPIED, WHICH IS GREAT FINANCIALLY, SO LONG AS OUR FOLKS CAN FIND A BED WHEN THEY NEED ONE. ADDING BEDS IS INCREDIBLY EXPENSIVE AND MUST BE CAREFULLY JUSTIFIED. THAT IS THE NEW REALITY.

 

A LOT OF US WHO USED TO GO TO CHAPEL HILL FOR SERIOUS CARE NOW GET OUR CARE HERE. SO WE WOULD LIKE TO SEE EFFORTS CONTINUED THAT ARE FOCUSED ON IMPROVING EVERY DEPARTMENT AS A CENTER OF EXCELLENCE, INCREASING EFFICIENCY AND LOWERING COSTS OF CARE AS THE CORE  STRATEGY. 

 

WE FEEL CONFIDENT THE HOSPITAL BY EARLY EVIDENCE AND CONTINUED HARD WORK WILL DO JUST FINE AS THE SHIFT TO SO-CALLED VALUE BASED HEALTHCARE GOES FORWARD.

 

SECOND, OUTPATIENT CARE IS GROWING RAPIDLY. IT IS A DIFFERENT SITUATION ENTIRELY. TECHNOLOGIES LIKE LASERS, ROBOTIC DEVICES, ARTIFICIAL INTELLIGENCE AND TELEMEDICINE ARE HELPING SPEED SURGERIES AND RECOVERIES WITH MUCH SHORTER HOSPITAL STAYS. NURSE PRACTITIONERS AND DOCTOR ASSISTANTS IN OUTPATIENT CLINICS ARE TRAINED AND EQUIPPED TO DO MUCH THAT HOSPITALS HAVE DONE BEFORE.

 

THIS HAS REDUCED HOSPITAL REVENUES AND FOR THAT REASON AND CONVENIENCE TO PATIENTS, THE HOSPITAL HAS RAPIDLY ADDED OUTPATIENT CARE FACILITIES. OTHERS HAVE ALSO JUMPED IN THE MARKET:

 

IN THE PAST FEW YEARS 12,000 RETAIL CLINICS AND URGENT CARE CENTERS HAVE OPENED NATIONALLY. WE SEE THEM ALL AROUND.

 

NEXT, THE GIANT TECH AND HEALTHCARE PLAYERS ARE COMING TO OUTPATIENT CARE. HOW SHOULD WE FEEL ABOUT COMPETING WITH AMAZON AND APPLE (“LOOKERS”) WALMART IN 3 STATES AND HEADED OUR WAY, GOOGLE WITH 70 CLINICS ALREADY, AND A $4B VALUATION, WALGREENS, IN JOINT VENTURES WITH HUMANA AND UNITED HEALTHCARE—ALSO WITH ITS OPTUM POWERHOUSE?

 

FURTHER, CVS NOW OWNS AETNA, HAS 9800 STORES, $250B REVENUE. BUT THEY’VE LOST RETAIL BUSINESS TO AMAZON, RESULTING IN STORE SPACE TO SPARE. CVS IS SETTING UP INTERNAL ONE STOP CENTERS FOR OUTPATIENT SERVICES IN ADDITION TO SELLING MEDICATIONS AND OTHER HEALTH PRODUCTS. IN EFFECT, THEY ARE RENT FREE COMPETITION. CVS IS TENACIOUSLY ROLLING OUT 2,000 “HEALTH HUBS” BY NEXT YEAR, PROMOTING SERVICES THAT COST “40% LESS THAN URGENT CARE”.

 

BOTTOM LINE—HARD TO PREDICT THE BIG WINNERS, BUT SOME WILL GET THIS RIGHT AND CUT MATERIALLY INTO OUR OUTPATIENT MARKET. IT WILL BE A CUTTHROAT BUSINESS WITH “RACE TO THE BOTTOM” PRICING .

 

STRATEGY #1—OUTPATIENT SERVICES WE CONTROL FEED INTO OUR HOSPITAL MARKET, SO OUR STRATEGY MUST BE FLEXIBLE—HOLD ON TO WHAT WE CAN, WHILE MARKETING  AGGRESSIVELY TO ALL COMPETITORS TO BE THEIR HOSPITAL OF CHOICE, JOINT VENTURE WHERE THAT IS PROFITABLE, AND SELL OR CLOSE UNPROFITABLE OUTPATIENT FACILITIES.

 

STRATEGY #2—THE EVOLVING VALUE HEALTH SYSTEM PENALIZES HOSPITALS FOR READMISSIONS, OFTEN CAUSED BY EXTERNAL LIVING CONDITIONS OF PATIENTS.  IF THE HOSPITAL STAYS INDEPENDENT, IT WILL GET A GOODWILL BONUS FROM THE REGION,—ACTIVELY ASSISTED WITH PATIENT SERVICES LIKE NUTRITION, EXERCISE, HOUSING, TRANSPORTATION AND MORE THAT AFFECT READMISSIONS. 

 

THE HOSPITAL KNOWS THAT INVESTMENT IN AN EXCELLENT COMMUNICATIONS NETWORK WILL BE REQUIRED TO REACH ALL EXISTING SERVICE PROVIDERS, AND ATTRACT NEW ONES, TO FILL GAPS WITH FUNDING FROM CHARITABLE AND GOVERNMENT SOURCES, NOT THE HOSPITAL.

 

THAT GOODWILL AND COMMUNICATIONS NETWORK ACCOMPLISHES ONE OTHER CRITICAL NEED—IT LOCKS THE COMMUNITY TIGHTLY WITH THE HOSPITAL AND HELPS PROTECT THE STREAM OF BUSINESS—OUTPATIENT AND INPATIENT.

———————-

PAG UPCOMING MEETINGS: PAG HAS THREE MEETINGS PRIOR TO MARCH 16 RECEIPT OF THE RFP RESPONSES MENTIONED EARLIER. 

 

THE FIRST MEETING SUBJECT IS GOVERNANCE. WE HAVE HEARD ENOUGH AT PAG MEETINGS TO BELIEVE LOCAL GOVERNANCE WILL BE YOUR CLEAR PREFERENCE. WE AGREE! YOU MUST NOT BE RECEPTIVE TO ANY PROPOSAL THAT SAYS WE CAN SELL OUT AND KEEP LOCAL CONTROL.THAT NEVER WORKS OUT.

 

THE SECOND MEETING SUBJECT IS CAPITAL NEEDS. IT SHOULD BE READILY APPARENT THAT FOR THE PRESENT THE ONLY SENSIBLE COURSE IS TO BE VERY CONSERVATIVE ABOUT THE AMOUNT OF CAPITAL RAISED AND DEBT INCURRED UNTIL POLITICAL, ECONOMIC AND COMPETITIVE ISSUES ARE CLARIFIED. THAT MAY TAKE TWO YEARS OR MORE.

 

YOUR THIRD MEETING SUBJECT IS  STRATEGIC OUTLOOK.  WHAT WE HAVE DESCRIBED IS THAT THE MAIN CAMPUS MUST BE DEFENDED BY EXCELLENCE. IT MUST OFFER THE BEST SERVICES AT THE LOWEST COST ATTAINABLE TO MAINTAIN PROFITABILITY.

 

HERE’S THE EQUATION; DRIVING DEMAND FOR BEDS IS POPULATION GROWTH AND EXCELLENT SERVICES (INCLUDING NEW MEDICAL SPECIALTIES AS PRUDENT TO ADD), MINUS / REDUCING DEMAND FOR BEDS FROM ANTICIPATED TECHNOLOGICAL AND COMPETITIVE IMPACT. THE RESULT IS RIGHTSIZING HOSPITAL BEDS. 

 

RERUNNING THAT CALCULATION ANNUALLY AND CONSERVATIVELY RESULTS IN RIGHTSIZING THE HOSPITAL FOR THE YEARS AHEAD.

 

SUMMARY RECOMMENDATIONS TO PAG:

 

  1. THE COUNTY OWNS THE HOSPITAL LAND AND BUILDINGS. LET’S SAY THEY ARE WORTH THAT MAGICAL BILLION DOLLARS. THE COUNTY BUDGET IS “ONLY” $400 MILLION/YEAR. THEREFORE, THE COUNTY HAS AN ASSET IT CAN USE FOR CREATIVE FINANCING, SUCH AS A PARTIAL SALE AND LEASE BACK IF THE HOSPITAL OR THE COUNTY HAS A REAL NEED.

  2. TO EXPLORE A MULTI-COUNTY EXPANSION, PAG SHOULD ASK IT’S NEW BANKER TO REDEFINE THE EARLIER EFFORT CALLED SYSTEMCO RIGHT NOW TO FIND OUT WHAT THOSE REAL STRUCTURAL AND FINANCING OPTIONS ARE.

  3. INITIATE EFFORTS TO ESTABLISH A NETWORK RELATIONSHIP WITH MAYO CLINIC, THE PERPETUALLY HIGHEST RANKED HOSPITAL IN THE COUNTRY.  WHILE MAYO IS ON THE RFP LIST, THERE SHOULD BE NO EXPECTATION THEY WILL RESPOND, AS THEY ARE NOT IN THE MARKET TO BUY. BUT THEY HAVE A POWERFUL NETWORK OF OVER 40 HOSPITALS AROUND THE WORLD WHO GET SECOND OPINIONS, TELEMEDICINE ASSISTANCE, CONSULTING AND RESEARCH IN HEALTH AND BUSINESS MATTERS. WE SHOULD APPROACH MAYO NOW!

  4. FOR COMPETITIVE, ECONOMIC AND POLITICAL REASONS THREADED THROUGHOUT THESE REMARKS, WE RECOMMEND THE HOSPITAL BE VERY CONSERVATIVE AND CAREFULLY STRATEGIC ABOUT WHERE IT INVESTS FOR THE NEXT SEVERAL YEARS.

  5. AFTER MARCH 16, FLATLY REJECT ALL PROPOSALS THAT CAUSE LOSS OF LOCAL CONTROL, BUT ASK THE CONSULTANTS TO GLEAN EVERY IDEA AND SOURCE OF STRENGTH IN OUR MARKETPLACE. AT LEAST WE SHOULD DERIVE A LEARNING EXPERIENCE AND PERHAPS ONE OR MORE VALUABLE STRATEGIC ALLIANCES BUT ONLY IF THEY STRENGTHEN OUR ABILITY TO REMAIN FIRMLY INDEPENDENT.

  6. NHRMC HAS EXCELLENT OPERATING MANAGEMENT LEADERSHIP. WE WOULD LIKE TO SEE STRONGER, CONFIDENT, VISIONARY INITIATIVES IN THE FUTURE COMING FROM HOSPITAL LEADERSHIP AND LESS FROM THE CONSULTANTS, GIFTED THOUGH THEY MAY BE.

Mission: Collaborating to fulfill greater Wilmington's potential.

Vision: A world class community.

Renaissance Wilmington Foundation (“RWF”) is a 501c3 nonprofit foundation established in Wilmington North Carolina in 2015. In a region with more than 1000 nonprofit social service organizations, only RWF is focused exclusively on the future of the region, based on research that distinguishes regions of the country that thrive. RWF derives from the preceding efforts of Vision 2020, the Waterfront Task Force and the Cape Fear Future Commission. 


RWF’s Moonshot is a plan for exponential acceleration of actions the Wilmington Region must accomplish to thrive. Consistent with its Mission, RWF seeks region-wide collaboration, fine tuning and implementation of the Moonshot.

Renaissance Wilmington Foundation

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